After-the-Event (ATE) insurance is a specialised form of legal expense insurance designed to protect individuals and businesses involved in litigation from the financial risks associated with legal proceedings.

Some parties to a legal case may have a pre-existing legal expenses insurance policy in place. This is known as “before the event” (BTE) insurance.

ATE insurance is arranged after a legal issue has arisen. This type of coverage is particularly valuable for claimants who might otherwise be deterred from pursuing legitimate claims due to the costs and financial risks of losing the case. ATE can also be used to meet a Defendant’s request for “security for costs” in a legal dispute.

If you have been left wondering, ‘do I need ATE insurance?’, Annecto Legal can provide the guidance that you require. Annecto Legal fills the gaps when clients need access to the best legal advice on any commercial dispute. It removes financial uncertainties and unforeseen legal expenses at a low cost.

What is ATE insurance?

ATE insurance covers the legal costs and expenses incurred during commercial disputes. ATE insurance can be used alongside conditional fee agreements, damages based agreements and third party funding to fund litigation.

ATE insurance is typically used to cover the costs of the opposing party’s legal fees and other costs if a business or individual loses a commercial dispute, as well as the client’s own disbursements.

This type of insurance can help mitigate the financial risks associated with pursuing legal action and can provide peace of mind to individuals or businesses involved in commercial disputes. ATE insurance policies are often tailored to specific case types and can cover a range of costs, including court fees, counsel fees, and other legal expenses.

Commercial ATE insurance can provide indemnity for a range of legal disputes, including commercial contract disputes, intellectual property disputes, shareholder disputes, professional negligence, property disputes, and many more.

There is usually an upfront cost for commercial ATE insurance. In some circumstances, however, payment of this insurance premium is deferred until the conclusion of the case and clients may only pay the ATE insurance premium from the funds received if their case is successful.

Do I need ATE insurance?

Some parties to a legal case may have a pre-existing legal expenses insurance policy in place. This is known as “before the event” (BTE) insurance. This can be taken out as a standalone policy; however, it is often included within, or as an optional extra, for other types of insurance, such as home or car insurance.

If, however, you do not have a BTE insurance policy in place, it may be recommended that you take out ATE insurance when pursuing litigation to protect you from having to pay your opponent’s costs. Even if you have BTE, if may be necessary to ‘top it up’ with the purchase of an ATE policy.

What are the benefits of ATE insurance?

ATE insurance provides a number of benefits to parties looking to pursue a legal action, including:

• It removes the risk of having to pay the opponent’s legal costs if the claim is unsuccessful.
• Claims can be pursued to their fullest extent as clients do not have to worry about the repercussions due to risk mitigation.
• It provides protection from interim costs orders. In some circumstances, a costs order can be made in favour of a party, allowing them to recover the costs of an interim hearing, irrespective of who actually wins the case at the final hearing. Depending on the policy, ATE insurance may protect against adverse costs in interim hearings.
• It can strengthen a claimant’s negotiating position. Opponents are aware that the claimant is financially protected against adverse costs, which can encourage more favourable settlement offers and deter the opponent from prolonging litigation in the hope of outspending the claimant.

Choosing the right solicitor

When considering ATE insurance, it is also important to note that having the right solicitor is also vital for your case. When making a claim, it is not essential to instruct the most expensive solicitor; however, your typical high street solicitor may not be the best choice either.

You should always choose a solicitor with the right specialism for your case to ensure the best outcome. It is also important to consider how your solicitor will be perceived by an opponent.

In addition to this, you may wish to think about your solicitor’s willingness to share the risk and their experience in working with legal funders and insurers. If you need assistance in getting the right representation then Annecto Legal can assist with this too.

ATE insurance and alternative funding methods

ATE insurance can be used in conjunction with various alternative litigation funding methods. These include:

Conditional Fee Arrangements (CFAs) – CFAs, commonly known as “no win, no fee” agreements, allow clients to defer legal fees until the case is resolved. When a no win, no fee basis is combined with ATE insurance, claimants are protected against the risk of paying the opponent’s legal costs if the case is lost. This combination makes pursuing a claim less financially daunting, as the claimant does not have to worry about their own legal costs or adverse costs.

Damages Based Agreements (DBAs) – Under DBAs, solicitors receive a percentage of the damages awarded to the claimant if the case is successful. When paired with ATE insurance, the claimant gains added security against adverse costs, ensuring that they are not liable for the opponent’s legal fees if the case fails. This combination can make DBAs more attractive to claimants who might be concerned about the financial implications of losing.

Third Party Funding – Third party funding involves investors funding the legal costs in exchange for a share of the proceeds if the case is successful. ATE insurance can complement funding by covering the potential adverse costs, reducing the financial risk for both the claimant and the funder. This makes the case more appealing to third-party funders, as the overall risk profile is lowered.

How can Annecto Legal assist?

Annecto Legal help clients realise the value of their commercial litigation claims. The application, quotation stage, costs and ATE insurance premium structures can be particularly complex. If you have been left wondering ‘do I need ATE insurance?’, we recommend that you contact our team as soon as possible so that we can provide the guidance you require.

We provide our services to a range of clients, including businesses, solicitors, commercial insurance brokers, individuals, insolvency practitioners and liquidators.

Get in touch with an expert member of our team to find out more about ATE for commercial disputes and which legal expenses insurance is the right litigation funding choice for you.

Unfortunately, because of the high costs of legal actions in the UK, we only assist in disputes in which the financial value of the claim is over £250,000, at the absolute minimum. We would like to be able to help on other claims, but we just don’t have access to any products that can assist on smaller matters.